Posts Tagged ‘income inequality’

Last week fast-food workers walked off the job in over a hundred cities across the country to demonstrate against exploitation and wage slavery in fast-food corporations. Thousands of participants organised to demand a $15 an hour living wage. The tide of indignation is rising. From Walmart to Caterpillar, from Macy’s to the top six fast-food chains public outrage over naked worker exploitation is mounting. Inequality in the United States has reached fever pitch.

I’ve collated data from a series of articles and public policy reports published over the last several months to paint a picture of a nation haunted by the spectre of a growing class divide.

According to the Social Security Administration nearly 40 percent of all workers in the country made less than $20,000 last year. This doesn’t include figures on benefits such as health insurance or pensions. That’s below the federal poverty threshold for a family of four and close to the line for a family of three. On average, these workers earned just $17,459.55.

The New York Times reported on The Economic Policy Institutes findings that the bottom 20 percent of American workers by income — 28 million workers — earn less than $9.89 an hour; “That translates to $20,570 a year for a full-time employee”. Between 2006 and 2012 these workers saw their income fall by 5 percent. The report also found that wages for workers at the 50th percentile — their median pay is $16.30 an hour — have also dipped, falling 3.4 percent, while pay for the top 10 percent rose 3 percent.

A glaring disconnect between the nation’s top corporate executives and their wage earning employees couldn’t be starker. While workers wages have flatlined, executive pay jumped 16 percent last year alone. Citing Equilar, an executive compensation analysis firm, The Times reported that top executives were raking in, on average, $15.1 Million.

The pay gap between CEOs and their employees working in Fast-Food is particularly staggering. Speaking on Democracy Now, Sarah Anderson, author of the new report “Fast Food CEOs Rake in Taxpayer-Subsidised Pay“, gives an inside peak into how the top six fast-food corporations are taking advantage of a perverse tax loophole, one that rewards fast-food CEOs for underpaying employees. The way this “loophole” works is that it allows companies to deduct unlimited amounts from their corporate income taxes to pay their executives. The stipulation that makes this a loophole rather than broad day light robbery is that the deductions only apply to performance pay – things like stock-options, and related bonuses that come out of the cauldron of financial wizardry. Through this corporate handout fast-food executives are able to obfuscate the real costs of production.

Anderson’s study reveals that over the past two years, the CEOs of the top six publicly held fast food chains – YUM Brands (KFC, Taco Bell, Pizza Hut), McDonalds, Wendy’s, Burger King, Dunkin Brands and Dominos – “pocketed more than $183 million in fully deductible ‘performance pay,’ lowering their companies’ IRS bills by an estimated $64 million.”

In syllogistic form it looks something like this: If companies pay their executives more, then they pay less in federal taxes. Companies pay their executives butt-loads more. Therefore tax-payers get reamed. Mind your P’s and Q’s!

Not only is this low-ball business model denying fast-food employees a living wage and affronting their dignity by setting their human value so low that affording basics like food, water, clothing and shelter is impossible without government support, a second-job or illicit income, this business model is externalising its labor expenses. One study conducted by University of California Berkeley found that more than half of frontline fast-food workers depend on at least one public assistance program costing tax-payers a whopping $7 billion annually. What it comes down to is that fast-food company profits are being mystified. The real costs of labor, distorted by government handouts fatter than fast-food itself, is hiding the hidden reality of tax-payer-subsidized profits. Regular costs of doing business are being transformed into plain profits that ascend directly to the top. While Wendy, Colonel Sanders, the Burger King and Ronald McDonald stiff their employees and pocket the spoils millions of Americans are paying them to do it.

The coals of antagonism are smoldering. The wages of working people have levelled down below the costs of their subsistence. At the same time executive pay has soared. Last weeks organised protests against mass exploitation didn’t pit industrial workers against a class of industrial elites. The economy of mass consumption swallowed that of mass production. What last weeks’ calls for dignity and fair living wages express, however, is a new iteration of class struggle. America stands divided and unequal. The spectre of class war is present. “We’ll be back”, protesters chanted as they exited a McDonalds in Times Square.